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The marketing department of the X Corporation provided its management with the following estimate of the...

  1. The marketing department of the X Corporation provided its management with the following estimate of the demand function for the firm’s product:

QdX = 12,000 – 3 PX + 4 PY – 1M + 2AX

where QdX is the amount consumed of good X, PX is the price of good X, PY is the price of good Y, M is consumer income and AX is the amount of advertising devoted to good X. Suppose good X sells for $200 per unit, good Y sells for $15 per unit, the firm utilizes 2,000 units of advertising on good X and consumer income is $10,000.

  1. If the cost of producing a unit of good X is a constant $1,000 per unit, what are the profit-maximizing values of QX and PX?
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